Pitching “NSA-free” cloud services in Europe isn’t enough to become successful. In a bid to give French cloud provider Cloudwatt a boost, Orange is in negotiations to take over the whole company.

Cloudwatt was founded in 2012 by Orange, aerospace and defence company Thales and the French government to offer a “Made in France” cloud service. But while there is an interest in locally owned and hosted services across Europe, simply waving a national flag over a cloud offering is not enough to insure success in what has become an increasingly competitive and fast moving sector.

In Europe, cloud security and data sovereignty have become hot topics thanks to disclosures made by U.S. National Security Agency leaker Edward Snowden. For sensitive data and processes, security may be the biggest factor in choosing a cloud provider.

However, in most cases, other factors, such as cost and suitability of services for the information and processes being served, are also very important, according to David Bradshaw, research manager for software and services at IDC.

Cloudwatt was founded in 2012 but didn’t launch commercial services until July last year. It has bet big on OpenStack, which has many big-name backers but has been slow to take off among enterprises. One pain point is a lack of experienced staff, which makes the platform harder to roll out and manage, according to René Büst, senior analyst and cloud practice lead at Crisp Research.

By taking over the whole company, Orange likely hopes to speed up the development of services other than virtual servers. The company needs a broader range of offerings to compete with the likes of Amazon Web Services.

“Cloud providers that are still focusing on pure infrastructure will struggle in the future, because infrastructure on its own isn’t competitive any longer. The really interesting stuff is what’s offered on top of that,” Büst said.

Bradshaw agreed: “Does the vendor offer a ready-made service that can do the job for me, or am I going to have to build it myself?”

Orange has confirmed it is in talks regarding Cloudwatt, though it has not given a timetable for when negotiations will be concluded. But a deal is expected to close in March, reported French news paper Les Echos on Sunday.

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